Question #115254

e) Assume that, due to the economic downturn, the president predicts that the corporation will earn only 4.5% per year on its money, not the previously anticipated 10% per year. What is the required amount of the annual revenue series over the 5-year period to be economically equivalent to the amount calculated in (d)?

Expert's answer

Let the corporation receive 5,000 each year from calculated in (d)

this is an annuity, find the future value of the annuity

"FV=A\\times\\frac{(1+r)^n-1}{r}"

"FV=5000\\times\\frac{(1+0.045)^5-1}{0.045}=27353.55"

Learn more about our help with Assignments: Finance

## Comments

## Leave a comment